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Problem 3-5 Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Current assets Net fixed assets Actual 2021 Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity $ 7,500 5,800 700 250 90 660 231 $429 Forecast 2022 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET $ 7,900 6,100 700 260 Actual 2021 120 720 252 $ 468 3,800 3,000 $ 6,800 $1,150 700 4,950 $ 6,800 Forecast 2022 $ 4,050 $ 1,270 500 a. Assume that Universal plans to purchase $700,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022

Problem 3-5 Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Current assets Net fixed assets Actual 2021 Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity $ 7,500 5,800 700 250 90 660 231 $429 Forecast 2022 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET $ 7,900 6,100 700 260 Actual 2021 120 720 252 $ 468 3,800 3,000 $ 6,800 $1,150 700 4,950 $ 6,800 Forecast 2022 $ 4,050 $ 1,270 500 a. Assume that Universal plans to purchase $700,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 3-5 Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Actual 2021 Current assets Net fixed assets Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity $ 7,500 5,800 700 250 90 660 231 $ 429 Forecast 2022 $ 7,900 6,100 700 260 120 720 252 $ 468 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET Actual 2021 $ 3,800 3,000 $ 6,800 $ 1,150 700 4,950 $ 6,800 Forecast 2022 $ 4,050 $ 1,270 500 a. Assume that Universal plans to purchase $700,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? 20 b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022 Next
Transcribed Image Text:Problem 3-5 Universal Products Company has almost finished its pro forma financial statements for 2022, as shown next. Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) INCOME STATEMENT Sales Cost of goods sold Operating expense Depreciation expense Interest expense Earnings before tax Tax Net income Actual 2021 Current assets Net fixed assets Total assets Current liabilities Long-term debt Owner's equity Total liabilities & equity $ 7,500 5,800 700 250 90 660 231 $ 429 Forecast 2022 $ 7,900 6,100 700 260 120 720 252 $ 468 Universal Products Company Financial Statements, 2021 and Pro Forma 2022 ($ thousands) BALANCE SHEET Actual 2021 $ 3,800 3,000 $ 6,800 $ 1,150 700 4,950 $ 6,800 Forecast 2022 $ 4,050 $ 1,270 500 a. Assume that Universal plans to purchase $700,000 in fixed assets during 2022 and to dispose of no fixed assets during 2022. What would be its forecast for net fixed assets in 2022? 20 b. Assume that Universal plans to have a dividend payout ratio of 50 percent in 2022 and will neither sell nor repurchase equity during 2022. What would be its forecast for owner's equity in 2022? c. Given the assumptions in questions (a) and (b), what is Universal's projected external funding required for 2022? Net fixed assets in 2022 Owner's equity in 2022 External funding required for 2022 Next
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